Why cash from Kenyans in South Africa shrank 13 times

President William Ruto and South Africa's Cyril Ramaphosa

Kenya’s President William Ruto (right) with his South African counterpart Cyril Ramaphosa during their meeting in Nairobi on November 9, 2022. The two witnessed an agreement that could end decades of complaints from Nairobi on immigration policies by South Africa. PHOTO | NMG

Dollar inflows from Kenyans living in South Africa have shrunk 13 times over the past three years, pointing to difficulties in getting work permits for skilled workers post Covid-19 despite a deal on a long-standing visa row between the two countries.

Official data show remittances from Kenyans working in South Africa have plunged to $17.46 million in the year to February compared to $228.68 million in a similar period three years ago when Covid-19 travel curbs forced many Kenyans to return home.

The inflows have slid from a multiyear monthly peak of $45.73 million (Sh6.13 billion under the prevailing exchange rate) in June 2020 to a measly $708,000 (Sh94.87 million) in February, Central Bank of Kenya (CBK) data show.

The Kenyan diaspora community has largely attributed the plunge in monthly remittances to the growing climate of economic nationalism unfavourable to the hiring of non-South Africans.

Access to skills and jobs are delicate issues in South Africa where millions of poor blacks still live in grim townships a quarter of a century after the end of apartheid.

Kenya Diaspora Alliance (KDA) said there have been cases where skilled Kenyans working for reputable firms in South Africa, including universities, have failed to have their work visas renewed post-pandemic, forcing them to leave.

“Covid shutdowns forced many Kenyans there [South Africa] to return home, thereby lowering remittances. South Africa is also increasingly becoming nationalistic. It is hard to get a work visa from the Home Office even for skilled workers,” the global chair for the lobby representing Kenyans abroad, Shem Ochuodho, told the Business Daily.

The drop in the remittances from South Africa has seen it leapfrogged by Tanzania and Uganda as the top source in Africa post-pandemic.

Dollar inflows from Kenyans in Tanzania, for example, stood at $56.19 million (Sh7.53 billion), while Uganda’s was captured at $27.71 million (Sh3.71 billion).

The CBK data show annual diaspora remittances from South Africa stood at $20.6 million (Sh2.76 billion) last year, slightly improved from $17.91 million (Sh2.40 billion) in 2021.

The negative impact of the coronavirus was heavier in developing countries such as South Africa than in developed nations like the United States where citizens and businesses enjoyed bailouts and social support worth trillions of shillings after workers were either laid off or forced to stay indoors to contain the pandemic.

In Africa, most governments lacked adequate spending power amid falling tax revenues and huge debt payments, which left residents hit by the pandemic without any support.

As a result of job cuts, pay cuts and lockdown measures those living in other African countries were unable to send money home during the pandemic period, with some struggling to get their jobs back post-Covid.

For instance, remittances from Kenyans living and working in other African countries stood at $205.46 million (Sh27.53 billion) last year, a 38.29 percent fall from $332.95 million (Sh44.62 billion) in 2020.

The drop in inflows from Africa is largely on the back of South Africa’s sharp slide. South Africa has recently signalled its intention to ease visa rules for Kenyan traders and workers, which could increase the number of critical skills eligible for work permits.

South African President Cyril Ramaphosa allowed Kenyans to visit his country visa-free for 90 days from January this year following a deal reached with President William Ruto on November 9, 2022.

Read: Weekend retreats in South Africa visa free

South Africans have since 2017 been getting free visas on arrival to Kenya for stays of up to 30 days in a policy shift made by Dr Ruto’s predecessor, Uhuru Kenyatta.

Mr Kenyatta initiated talks for visa-free travel between the two countries when he visited South Africa in 2016. South Africa previously charged Kenyans for visas and required them to prove they had sufficient cash in their accounts and return tickets.

Diaspora remittances are the largest source of foreign exchange ahead of tourist receipts as well as tea and horticultural exports.

Kenyans abroad typically send money to help their families offset bills like school fees and medical expenses as well as invest in projects such as real estate.

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